It depends. First, the sale of your personal residence is excluded when the gain is $250,000 or less per taxpayer (married filing joint taxpayers could claim a $500,000 exclusion) and the residence period lasted 2 out of the last 5 years. For what is deductible from the closing costs, the federal tax return must be addressed before determining any California adjustment.
2019 Publication 523 Sale of Your Home page 8 of 32 provides a list of what can be deducted from fees and closing costs.
See this link for an overview of the federal tax return treatment: I sold my home, what can I deduct?
For the California tax return, your main resources are:
2019 FTB Form 540 Personal Income Tax Booklet, page 41, column 2: "Use Schedule D (540), California Capital Gain or Loss Adjustment, to calculate the amount to enter on line 6....Gain on the sale of personal residence where depreciation was allowable."
FTB State of California Guidance: Income from the sale of your home
2019 FTB Schedule D (540) Instructions
Per FTB Publication 1001 from 2018, the most recent Publication available from California, page 12:
- Difference between Federal and California Law: "For sale or exchanges after May 6, 1997, federal law allows an exclusion of gain on the sale of a personal residence in the amount of $250,000 ($500,000 if married filing jointly). The taxpayer must have owned and occupied the residence as a principal residence for at least 2 of the 5 years before the sale. California conforms to this provision. However, California taxpayers who served in the Peace Corps during the 5 year period ending on the date of the sale may reduce the 2 year period by the period of service, not to exceed 18 months."
- What to do for California: "If there is a difference between the amounts excluded (or depreciated, if recapture applies) for federal and California, complete California Schedule D (540 or 540NR). Transfer the amount from California Schedule D, line 12a, to Schedule CA (540), Part I or Schedule CA (540NR), Part II, line 13, column B (if gain is less than federal). Transfer the amount from California Schedule D, line 12b, to Schedule CA (540), Part I or Schedule CA (540NR), Part II, line 13, column C (if gain is more than federal)."
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